Homeowners are accustomed to mortgage payments that include taxes and insurance. Every month you pay 1/12th of the annual tab (give or take), and the lender socks it away into an escrow account for when the bills come due.
But a lot of the subprime loans made during the pre-credit-crunch frenzy didn’t come with escrow accounts. There’s nothing like being hit with an unexpected tax bill to ruin your day — or wreck your budget.
The city's rate is $2.268 per $100 in assessed value. Washington's is 85 cents.
Baltimore homes are a lot less expensive than D.C.'s, though, so it's useful to know what you'd be paying if you recently bought the average house in each city (assuming your assessment matches up with the average sales price in August):
Average sale prices fell in all parts of the metro area last month except Howard County, which recorded a 3.3 percent increase. The drop was largest in Carroll County, down 17 percent to about $300,000. That's below the average of four years earlier and is $75,000 less than Carroll sellers got in September 2005.Average prices in the rest of the metro area were at or below 2005 levels, with the exception of Baltimore. The city's $170,000 price last month was $8,600 less than sellers got two years earlier but $7,200 more than the average in 2005.
There's also an interesting -- if depressing for homeowners -- discussion by economists about the "true" drop in prices and the number of people underwater on their mortgages.
New numbers from Metropolitan Regional Information Systems show home sales falling about 2 percent from a year ago, a sharp change after months of losses in the neighborhood of 30 percent. Those big declines started in September 2007 as lenders clamped down on borrowing rules, which means we're no longer comparing sales to pre-crunch days.
Average prices dropped 5.9 percent in the metro area, sliding below September 2005 values. The average price last month was about $296,000 vs. nearly $304,000 three years earlier.
The biggest decline in average price came in Carroll County, which was down 17 percent. Howard County recorded the lone increase -- 3.3 percent -- but its median price dropped, so you might take that with a grain of salt.
Both Howard and Carroll saw sales jump -- particularly Howard, up 26 percent. And sales were almost even in Baltimore City and Baltimore County.
Its piece on Charles Village includes this commentary on the neighborhood's taxing structure:
Recognizing the limits of their authority to address safety concerns, residents, citizen groups, and alliances from Baltimore's Charles Village neighborhood turned to the Maryland State Assembly for help. They proposed establishing a benefits district so they could collect a small levy from property owners for additional security and sanitation services. At the time such districts had been established for U.S. downtowns and commercial zones only and not for residential areas.The neighborhood's proposal was approved, enabling the Charles Village Community Benefits District to be formed in 1994. Funded by a minimal levy on property values, the district has successfully managed to cut crime in half since its inception while serving as a model for three additional service districts in Baltimore.
Other neighborhoods on the list include Society Hill in Philadelphia, Old Town in Wichita, Kansas and Greater Park Hill in Denver.
The APA, meanwhile, praised Annapolis' Main Street for its "three centuries of history and well-preserved 18th- and 19th-century buildings."
We now return you to your regularly scheduled depressing economic news. Did you see the big ad in the paper today by a bank that just wanted to note for the record that it's a safe place to put your money?
The spotlight's on interest rates today -- the Federal Reserve, trying to stem more economic pain, announced early this morning that it is cutting its benchmark rate by half a percentage point -- so what better time to check in on the rates that matter most to homebuyers?
Zillow.com, which has a "mortgage marketplace" where borrowers can get quotes from lenders, says the average rate quoted for Marylanders last week was 6.02 percent for a 30-year fixed mortgage. That's down slightly from the week before but is tied for third-highest among the 20 states with the highest volume of quotes, Zillow says. (Lowest was Georgia, at 5.88 percent.)
Americans planning to buy in the next two years told Zillow in a survey that their top concern was interest rates (two-thirds called that a worry), followed by local property taxes, the purchase price and closing costs.
Rates are actually lower on average than they were last year or in 2006, according to Freddie Mac's data. But they've been bouncing around so much in recent months that buyers probably don't know what to expect.
Coldwell Banker said yesterday that home sellers across the country will lower their asking prices by as much as 10 percent during a sales event running Oct. 10 through 19. In Baltimore and its five surrounding suburbs, more than 300 sellers have agreed to lower prices “significantly,” Coldwell Banker Residential Brokerage Greater Baltimore told me.
"This is a really neat, interesting, good opportunity if you've been waiting, watching prices," said Melissa Brever, marketing manager with the Greater Baltimore company.
The local breakdown, in case you're interested: 102 participating sellers in Anne Arundel, 79 in Baltimore City, 71 in Baltimore County, 14 in Carroll, 34 in Harford and 16 in Howard.
Once the event kicks off, buyers can see which properties are participating and how the prices have changed at cbmove.com. There's also supposed to be event information at coldwellbank.com/event.
Tip of the hat to Wonk reader John for giving me a heads-up about the announcement.
Coldwell Banker said three-quarters of its U.S. agents surveyed recently believe most sellers have “unrealistic expectations” about price, but an equal amount think a reduction of 10 percent or less would be enough to interest buyers. (Almost 80 percent "agreed that homes in their market that are priced appropriately are attracting more buyers and moving more quickly," the company says.)
So, potential buyers, here's an unscientific survey: What sort of reduction would it take for you to do a deal? Is it price or something else keeping you from signing on the dotted line?
Associated Press photo
Foreclosure can affect you and your neighborhood, never mind if you personally have never been late paying your mortgage. When lenders repossess homes, economists say, values go down nearby.
The good news is that the riskiest mortgages — subprime — made up 10 percent of all loans in the Baltimore metro area as of May, down from 13 percent a year earlier. That’s according to an estimate by First American CoreLogic.
The bad news? About 8 percent of metro-area homes with subprime loans were either in the foreclosure process or had been foreclosed on, almost four times what it was a year earlier.
A homeowner or buyer could be excused for wanting to know how good or bad, exactly, the mortgage picture looks close by. With a bit of time, you can find some answers.
Continue reading "How-to Monday: Researching loans and foreclosures" »
Better yet -- chime in below about why you think things will turn around soon, not so soon or really not soon.
UPDATE at 8:30 p.m. 10/7: About 40 percent of you say 2010. Just over a quarter predict things will turn around next year, 12 percent think it'll be years from now, 8 percent say 2012 and 6 percent each opted for "soon" and 2011.
But rather than do my own crunching this time, I've graphed the Maryland Association of Realtors' first-time homebuyer affordability index, which tries to measure whether a typical first-timer could afford the typical "starter" home. (The group, relying on survey data, assumes a first-timer's median household income is 57 percent of all buyers and a starter home is 85 percent of the median home price.)
If the affordability index hits 100, it means that first-time buyer has enough income for the starter home. If the index is, say, 50, the buyer has only half the income needed. Here's how the index has changed in recent years:
